A transgenic mouse strain derived from embryonic stem (ES) cells infected with multiple copies of a retroviral vector carries a recessive insertional mutation resulting in prenatal lethality. A detailed histological analysis of developing embryos has shown that the mutation results in hyperplasia of both embryonic and extraembryonic ectoderm and failure of mesoderm formation in the egg cylinder stage embryo. The number of cells in each lineage of normal and mutant embryos was estimated using stereological analysis of serial sections taken from implantation sites. We observed a 2-fold increase in the number of embryonic ectoderm cells in mutant embryos at 7.5 days postcoitum (dpc). In addition, we found that mutant embryonic ectoderm cells are only 0.6 times as large as normal cells. The number of extraembryonic ectoderm cells in mutant embryos at 7.5 dpc is also increased, by almost 4-fold. Mutant extraembryonic ectoderm cells are also smaller than normal, being only two-thirds the size of wild-type cells. The mutant phenotype suggests that the gene identified by this insertional mutation plays an important role in the growth control of early embryonic lineages.